Price is the number one driver when it comes to switching mobile service providers

SYDNEY, AUSTRALIA – BYO mobile plans are set to further shake up Australia’s mobile services market, resulting in less long term subscriptions, according to emerging technology analyst firm Telsyte.

With an estimated over 25 million handheld mobile services in operation (SIO) at the end of June 2016, more than half of handsets are now on non-contract plans leaving the door open for more movement between carriers.

Among those who switched mobile service providers in 2015, two thirds opted for non-contract plans, an increase of more than 10 per cent over 2014.

Telsyte believes Telstra’s high-profile network outages in the first half of 2016 combined with more competitive 4G plans available in the market will encourage mobile handset service subscribers to shop around.

Slowing mobile services growth

Telsyte predicts M2M and secondary devices will be the main drivers for future market growth towards 2020 while the increase of handset SIO (Services in Operation) will be limited to net population growth as the market is highly mature.

However, non-handset SIOs typically have lower ARPU (Average Revenue Per User) and do not contribute as much profit per service when compared to handsets.

This might impact the profitability of carriers. Telstra is particularly vulnerable as it has experienced some of the lowest net SIO additions from handsets ever during six month to December 2015 and some 71 per cent of its new services came from lower ARPU machine-to-machine (M2M) connections.

While Telsyte estimates Telstra will maintain a strong lead in the M2M (machine-to-machine) market, other service providers are likely to attack their handset market share aggressively.

Telsyte research is showing price remains the number one reason for switching carriers and more than half of consumers considering changing MSP are driven by price. Lee predicts price competition will likely see ARPU starting to decline for more MSPs in the second half of 2016.

4G crosses the halfway mark

Telsyte research shows that 52 per cent of mobile SIOs are now on 4G networks, with penetration expected to reach 85 per cent by 2020.

With more than half of all smartphone services using 4G services, there will be more competition around delivering services to consumers that can make use of faster download speeds and larger download allowances such as streaming music, video and games.

The ability of networks to tap into growing mobile trends such as Pokémon Go and live streaming will help grow data utilisation by consumers. In 2015, the average growth of data allowances was 76 per cent, however data usage only grew by 45 per cent.

Telsyte estimates that 2 million Australian smartphone users had downloaded Pokémon Go by the end of July 2016.

For further information on the report or media enquiries contact:

Alvin LeeSenior AnalystTel: +61 2 9235 5890Email: alee@telsyte.com.au

Editors please note, Telsyte will not be publicly supplying individual service provider estimates.

An online survey of a representative sample of Australians 16+ years of age conducted with 1,075 respondents in November 2015.

Financial reports released by service providers.

On-going monitoring of local and global market and vendor trends.

About Telsyte

Telsyte delivers strategic insights and advisory services to businesses that are producing, or are impacted by, disruptive technologies. Telsyte publishes studies into emerging consumer and business markets and provides custom research and advisory services. Telsyte is an independent business unit of CSC. www.telsyte.com.au

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